Friday, June 29, 2012

They took $19,127.70 (over 4
years) from Cub Scout Pack 70. They embezzled $4,743.88 from Cub Scout Pack 1
(over 2.5 years). They misused an Action Family Network debit card for personal
use to the tune of $2954.21.

These serial thieves were given two-year probation
(until June 25, 2014). If the probation requirements are fulfilled, the
charges will be dropped in two years. Kimberly and Kevin Clark are to pay a
monthly $50.00 probation supervision fee, a $90.00 victim witness assessment
fee, and also pay restitution (which is to be determined at a later date; July
18, 2012). They wrote an apology letter to Judge Kunis and expressed regret for
their actions. (link)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

The current continuing drumbeat at
the Susan G. Komen foundation would seem implausible just over one year ago.
Few outsiders would have believed that their beloved foundation had so many systemic
problems. But apparently insiders knew that that the organization was devoid of
leadership, full of conflicts of interest, practices that were problematic and
very questionable financial procedures.

Once the public got a peek at
the organizational practices as a result of poor decision-making, the staff
started to bail en masse. Virtually all of the staff in prominent positions has
left, either voluntarily or otherwise. Many board members have vacated their
roles as well.

The
very latest loss is pivotal. The development vice president just left. This one
is particularly damaging because the turnout at pink-ribbon fundraising is
substantially down, some by as much as 40%. Sponsors also took flight with
important stalwarts such as U.S. Congressman Mike Honda, who packaged up over
$10,000 in contributions last year leaving. The amount is not consequential,
but quite symbolic.

But the fading pulse of the
organization remains in place and keeps her tight reign. Nancy Brinker, Susan
G. Komen’s sister, continues to make most of the decisions from her perch as
both the principal staff member and board member. According to insiders, little goes on without “madam
Ambassador’s approval”. Under Brinker’s leadership a controversial decision was
made to de-fund Planned Parenthood. Her personal response as the head of the
organization to the public outcry enveloped the Komen foundation with even more
bad publicly. She exacerbated the clamor by hiring a public relations firm that
had a history of attacking Planned Parenthood. Since then, Brinker has not been
heard from. There is no spokesperson for the agency.

The organization’s defense of
conflicts of interest (the board was stacked with family and close
confidantes), poor business practices (Brinker’s use of charity funds for her
own personal use; boosters buying Brinker’s endorsement; paying hundreds of
thousands of dollars in severance; huge travel expenses, office, and consulting
fees), her leadership (the use of intimidation and firing those that did not
follow her directives precisely) have never been addressed.

The stonewalling at Susan G.
Komen is legendary. When Brinker was working full-time for the federal
government, the agency paid $133,000 for her personal expenses. To date, there
has not been a full explanation of the expenditures. There is a remarkable bunker mentality within the leadership
as management continues to turn over rapidly.

The
puzzling vacuous leadership at Susan G. Komen has lead to a catatonic state for
the foundation. I was asked if there is any possibility of reversing the
direction of the beloved and revered pink ribbon from what is now said to
be pink slime? I am bewildered.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Monday, June 25, 2012

It is reaching epidemic proportions. In just the past three
hours 4 examples of cheating vulnerable children have surfaced.

At Fired Up for
Kids in Colorado the agency’s founder is charged by the
district attorney with stealing $243,399.22. She has been arrested by Glendale Colorado authorities and charged with multiple theft and fraud counts. The hunk-laden firefighter calendars
proceeds she sold were earmarked for The Children's Hospital for children burn
victims. Bank statements that
allegedly show her ringing up a $700 bill to 24 Hour Fitness, charges
related to a trip to Disneyland by the founder and her children, payments for
the kids' private-school tuition, and cash expended on car repairs and a shopping
trips to Saks Fifth Avenue, Whole Foods and Comedy Works and Nordstrom.

In New York, an upstate company improperly diverted
more than $800,000 from Important Steps Inc., preschool special education
program for Special-needs3- and
4-year-olds. Billings grew from $1.6 million in 2006-7, its first school year
in the program, to $5.7 million a year later. An audit office of the company’s
2007-8 records found that it had overbilled by hundreds of thousands of dollars
that year.The company’s owners
spent several thousand dollars on floor tiles, trees and shrubs to renovate and
landscape their second home in the Poconos. The owners were arraigned on five
felony charges, including grand larceny, tampering with public records and
filing false documents.

An audit at Special
Education Associates Inc. of Brooklyn, which was one of the city’s busiest SEIT
providers this year, with 170 children receiving instruction showed that the company’s owner paid his wife $150,000 a year as his
assistant executive director, while she was earning $90,000 a year as a
full-time professor of speech, language and hearing sciences at Lehman College
of CUNY. He pleaded guilty to defrauding the government, a felony, and was
sentenced in December to five years’ probation. He also paid $610,000 in a
civil settlement with the Manhattan district attorney’s office, agreed to a
lifetime ban from the pre-K special education program, and sold the business. His wife is due in Bronx Criminal Court to face felony
charges of grand larceny and defrauding the government.

A another company, Capital District Beginnings of Troy, N.Y., will
have to pay back $831,244 in disallowed expenses. The company, which serves 800
children in a 12-county area that includes Albany, charged government $240,000
for salaries for its two co-owners, though they performed little work, auditors
said.

One of them had moved to South Carolina for health reasons but
still received full-time pay and a company car.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Thursday, June 21, 2012

Yonkers (NY) public libraries collected fines by the pennies---10 cents
for most books, 50 cents for new seven-day ones. A well-liked longtime employee
was responsible for taking the money collected by the branches.

For seven years, she would regularly alter
the collection paperwork to reflect a lower amount of fees and pocket the
difference after taking money out of the library deposit bag and she made off
with $163,582. Only after a new business manager was hired were the thefts
discovered. The library hadreviewed its procedures and made sure more people were involved with monitoring accounting issues.

She needed the money because she had a gambling addiction —
including gambling in Atlantic City and playing the lottery. She pleaded guilty to felony charges of grand larceny and
filing false tax returns and was sentenced six months in the Westchester County
Jail and the rest of the nextfive
years on probation. She will also have to make restitution for the amount of
the theft. Prosecutors had sought a state prison sentence, which would have
meant at least a year in prison.
(link)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Monday, June 18, 2012

CNN has
been in touch with Nonprofit Imperative as its investigations have
unfolded. Last month, NI reported
on how the Disabled National Veterans Foundation squandered and wasted millions
of dollars in donations. Here we go again with the latest example of charity malfeasance that CNN has unveiled. My bet is that this is going to be a
virtually never-ending issue.

Another
Fundraising issue:

SPCA
International raised $14-million raised in 2010, according to the charity’s
informational tax filings, but it reported that it spent less than 0.5 percent—roughly
$60,000—on animal-shelter programs in the United States. More money—about
$450,000, or 3 percent of the total raised in 2010—was spent on a “Baghdad Pups”
program, intended to bring back dogs used by the U.S. military in Iraq and
Afghanistan. However, the charity says only 26 of the nearly 500 animals
returned to the United States from the region were actually service animals,
with the rest being stray dogs. SPCA International, CNN found, is in debt to the fundraising company
according to a company spokeswoman. According to
publicly available Internal Revenue Service990 tax records. In
2010, SPCA International owed $8.4 million toQuadriga Art LLCand its affiliated company, Brickmill Marketing Services.

Leadership and Background Check Failure:

SPCA International spokeswoman Terri Crisp appeared on
CNN's sister network, HLN, last year. Crisp once headed a California-based
animal rescue charity, Noah's
Wish, which reached a settlement agreement in 2007 with the state of
California. In that settlement agreement from the summer of 2007, Crisp agreed
not to "serve as an officer, director or trustee or in any position having
the duties or responsibilities of an officer, director or trustee, with any
non-profit organization for a period of five (5) years from the date of the
execution of this Settlement Agreement." Yet in a filing with the North
Carolina secretary of state's office last year, SPCA International named Crisp
in its list of officers and directors. Crisp did not admit any wrongdoing in
the California settlement, but the charity agreed to return $4 million in
donations to California officials out of the $8 million raised by Noah's Wish.

Pierre Barnoti, who founded U.S.-based SPCA International in
2006, also has a questionable record as a charity manager. Three years after he founded SPCA International and became its
president, Barnoti was fired as the Montreal SPCA's president after leaving the
Canadian charity deeply in debt to Quadriga Art, according to Nicholas Gilman,
Montreal SPCA's executive director.

Gilman said that the Montreal SPCA still owes Quadriga Art
nearly $2 million and that the American fund-raising company has a lien on the
Montreal organization's headquarters building.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Thursday, June 14, 2012

Within the
last twenty-four hours there have been several reported frauds at charities by
leadership that have addictions. In my decade of monitoring charity fraud there
is a startling increase in addictions that have lead to the increasing rate of nonprofit
embezzlement.

In Tulsa
Oklahoma a director at the H.O.W. Foundation Recovery
Center is charged with defrauding the nonprofit corporation of more than $1.3
million. He is accused of using checks drawn on the foundation’sbankaccounts to pay personal credit card debts for almost 8
years. He maintained exclusive control over the foundation’s bank accounts and
the deposit of the foundation’s daily receipts. It is alleged that the
executive had battled substance-abuse problems earlier in his life before
letting a gambling addiction lead him astray.

This scenario is not uncommon.

Previously, the executive pleaded guilty to stealing $177,000 from the
Asperger’s Association of New England and was placed on five years of probation
and ordered to pay restitution. Now as head of the Maynard (MA) Retirement Board he is charged with ­embezzling more than $521,000 from the pension fund. The
thefts are attributed to an addiction to substance abuse.

Last month a Carson Valley Medical Center accounts payable coordinator
got five years probation and restitution for stealing $85,000 from the
institution. She had a drug, alcohol and gambling addictions.

A few weeks ago an accountant for the South Carolina Hospitality
Association pleaded guilty to embezzling $500,000 to support a gambling
addiction.

In York Pennsylvania, two months ago, an office manager at the York Symphony Orchestra pleaded guilty
to stealing $221,000 to prop his gambling addiction.

The chief Financial officer at the Philadelphia Archdiocese took more
than $900,000 to, in part, payoff his gambling debts.

At JaxCare in Florida an employee stole $500,000 ($800/day addiction).
The charity folded as a result.

The Boy Scouts Clovis chapter in California had a treasurer that was
arrested for stealing $73,000 to support a gambling habit.

For more than eight years an employee pleaded guilty to stealing
$815,000 from the Colorado Association of Executives because of a gambling
addiction.

The Colonel responsible handing out money to National Guard
families in Arizona is charged with stealing as much as $2 million over 13
years to support a gambling addiction.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Friday, June 8, 2012

In my community, the United
Way readjusted its funding priorities much to the dismay of several large
agencies. Since I was on the board of an agency, I am privy to the bad taste
that the process left. Aside from the effects on the agencies, many volunteers
that were rather large supporters of the United Way and were board members of affected
agencies could not support the process.

I guess the process elsewhere
has lead to similar results.

In York County, Pa. one agency, Habitat for Humanity, expected
to receive grants from the fund, and its board was "highly upset" and
offended to be omitted, according to Executive Director Debbie Krout-Althoff. The
agency took the unusual step of issuing a press release, under the heading
"Breaking News," to highlight the perceived snub.

The release
caught United Way Executive Director Bob Woods off guard. He said Habitat, a
new partner agency in 2010, isn't eligible until next year for Community Fund
donations, which are distributed through three-year cycles. However, a report
in The York Dispatch from 2010 on the new partnership quotes Woods as saying
Habitatcould receive Community Funds in 2011-12, but
noted it would have to submit a proposal, competing with 77 programs under
then-34 partner agencies. Woods said, "...
It doesn't do anyone any good to air this out in the public."

In
Dayton Ohio, the Area Chapter of the American Red Cross faces a 76 percent
reduction in funding from the United Way of Greater Dayton in the next fiscal
year. About 18 percent of the local chapter’s $3.7 million in revenue last year
came from the United Way. Tom
Fodor, CEO of the local chapter, said he was shocked by the United Way’s
decision to cut his group’s funding so deeply. “Nobody anticipates a 76 percent
cut,” he said.

Fodor said
the Red Cross was aware that the United Way’s funding priorities had changed
and his group tried to tailor its application to reflect the shift in focus. The shift in the formula has left the American Red Cross
with a big hole in its budget. During the past three fiscal years, the Red
Cross has seen its funding from United Way steadily fall from $751,800 to
$657,000, and now tumble to $156,500.

The Red Cross has
started to consider the ramifications of the funding cuts, but the organization
plans to appeal the funding decision. Fodor said Red Cross will see the appeal
process through before deciding how to cope with the loss in revenue.

It seems that in
all three cases communications were the problem. Although the shifting priorities
are meant to address some very acute problems, the process left a hole in the
transmission.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
• Nonprofits: On the Brink (iUniverse, 2006)

Wednesday, June 6, 2012

As the subscribers of Nonprofit
Imperative have read, Jerry Sandusky, the former PennsylvaniaState
University assistant football coach is accused of sexually abusing boys. Sandusky
was charged in November with 52 criminal counts related to the alleged abuse of
10 boys he met through the Second Mile, a charity he founded for needy children.

Federal Insurance
Co. issued an insurance policy to Second Mile, covering the charity and all of
its directors and officers, which included a
section stating that the company would indemnify any "'loss' which an
insured person becomes obligated to pay for a wrongful act committed,
attempted, or allegedly committed by an insured person. The policy was
issued on March 2011 for the period April 1, 2011 to April 1, 2012. In December
the insurer advanced $125,000 to Sandusky’s defense attorney. Federal sued that
month seeking a court order saying it isn’t required to provide the coverage.

Pennsylvania
public policy bars enforcement of insurance contracts that indemnify the
insured against damages arising from “certain reprehensible conduct,” said U.S.
District Judge Yvette Kane in Harrisburg, Pennsylvania. It’s unclear whether
the policy makes Federal’s duty to provide Sandusky with a defense unenforceable,
Kane said in court papers.

Without
the factual background that would come with discovery, Kane declined to answer
a question that would have such broad implications: whether or not the
insurance company was obligated to cover Sandusky's defense costs.

The
Second Mile announced last month that it planned to transfer its assets and
programs to a similar nonprofit, called Arrow, because after the allegations
against Sandusky, "there would not be adequate support, including
financial, from donors, volunteers and referring social service agencies to
continue The Second Mile as its own entity." (link)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
• Nonprofits: On the Brink (iUniverse, 2006)

Monday, June 4, 2012

A consortium of agencies elsewhere is looking at charity
fraud…in earnest. They think it is important. A number of charity sector bodies including Charity Finance
Group, Charity Commission and NCVO have joined together with the National Fraud
Authority (NFA), Fraud Advisory Panel, in Great Britain, and other public sector
and law enforcement organizations to produce a guide to help charities prevent,
detect and report fraud. Charity Fraud: A guide for the trustees and managers
of charities, is launched, along with tailored guidance for donors produced by
the Fraud Advisory Panel. The charity fraud guide is one of the outputs of the
Charity Fraud Project that unites the charity sector with the aim of reducing
fraud in charities.The Charity
Fraud publication has been written by the sector, for the sector, and pulls
together information from various sources to produce an accessible, easy to
read guide for charities. (link)
A truly novel idea for the U.S. that has a fraud rate estimated to be four times that of Great Britain.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more
• Nonprofits: On the Brink (iUniverse, 2006)

About Me

Gary Snyder is the author, most recently, of the groundbreaking expose on the charitable sector, Silence: The Impending Threat to the Charitable Sector as well as the often-cited guide on best practices and key concepts, Nonprofits: On
the Brink.

He is the publisher of a
twice-monthly newsletter, Nonprofit Imperative that gives an update on the current status of the
charitable sector.

Snyder is often quoted and frequent contributor to the blog of the National
Committee for Responsive Philanthropy. Snyder twiceauthored the Governance Chapter of the Michigan
Nonprofit Management Manual (4th and 5th editions).

He is a speaker on ethics,
financial and governance matters of the sector. For almost a decade, Snyder is frequently
consulted by Congress and has been quoted in print, broadcast and online media
outlets.